Income Tax Return: Can Budget 2024 tweaks impact your ITR filing? All you need to know ahead of July 31 deadline

With the revision of tax rates in the new tax regime (NTR) announced in Budget 2024, some taxpayers are in a dilemma about the rates at which they have to calculate their income tax liability while filing their income tax returns ahead of the July 31 deadline.

In Budget 2024, Finance Minister Nirmala Sitharaman announced a series of changes, including the revision of tax slabs under the new tax regime, a new rate of tax on capital gains, a higher standard deduction and securities transaction tax (STT) rate.

All these changes will obviously become relevant when you file your income tax return (ITR) for financial year 2024-25 next July.

Besides, the changes in capital gains were introduced with immediate effect i.e., July 23, 2024.

Let us understand more about this here:

1. Filing ITR before July 31: The income tax returns (ITR) being filed before July 31 refer to income earned during the financial year 2023-24. The Budget 2024 pertains to taxable income for FY2024-25. This makes the distinction amply clear.

To put it simply, the changes introduced in Budget 2024 will come into effect when you file your income tax return for FY2024-25, and not while filing the return for 2023-24.

2. When will the new rates be effective: The new income tax rates will be applicable on taxable income earned during 2024-25 i.e., from April 1, 2024 onwards.

3. When will the capital gains rate take effect? The capital gains tax rates were implemented with immediate effect, i.e. on July 23, 2024, when the Budget 2024 was presented in Parliament. This means gains on any sale of assets after July 23 will be taxed as per the rates announced in Budget 2024.

You can check out these rates in this article.

4. When can you claim higher standard deduction? Finance Minister Nirmala Sitharaman announced to raise the standard deduction for salaried employees from ₹50,000 to ₹75,000.

Again, the higher deduction will be allowed on the income earned during the financial year 2024-25, and not on the preceding year for which taxpayers are filing their returns these days ahead of July 31, 2024.

5. Why is there a confusion this time? Typically, there is no confusion because the Budget changes are announced a year in advance in February for the following financial year.

However, being an election year, 2024 witnessed two budgets: interim and full. The interim budget presented in February 2024 dealt with income and expenditure for the time period until the government presented the full Budget on July 23.

The full Budget announced on July 23, meanwhile, entails changes pertaining to the year 2024-25.

“The changes proposed by Budget 2024 will not impact the current ITR filings for FY2023-24. The provisions are for FY 2024-25 and onwards. No retrospective change has been made in the Budget,” says Chartered Accountant Pratibha Goyal, partner, PD Gupta & Company, a Delhi-based firm.